Court Rules Pat Bowlen Can Keep Broncos

The 10th Circuit Court of Appeals today ruled that Pat Bowlen may retain ownership of the Denver Broncos. The text of the opinion is here (pdf.)

Shorter version: the court ruled that Pat Bowlen did not violate a contract agreement with former team owner Edgar Kaiser when Bowlen agreed to sell 10 percent of the team to John Elway. Kaiser maintained he had a right of first refusal on any sale.

Advertisement

You may remember the breach of contract trial that took place in federal court in Denver in 1994 between Kaiser and Bowlen.

In plain English:

Kaiser, a Canadian tycoon who in a financial pinch sold the Denver Broncos to Bowlen in 1984 for $65 million, is the plaintiff. His claim: Bowlen cheated him out of the chance to buy back stakes in the team years later.

In legalese, from today’s opinion:

In the district court, Kaiser claimed that Bowlen: (1) breached a warranty in the contract by purchasing the majority interest as a nominee for his family’s company; and (2) violated a contract term that gave Kaiser a right of first refusal to buy back an interest equivalent to one offered to former Broncos’ quarterback John Elway. A jury rejected the first claim but found in Kaiser’s favor on the second.

In February 2004, a Denver federal court jury said Kaiser should have the opportunity to buy back 10 percent of the Broncos for $15 million — the same deal offered ex-quarterback John Elway — via a right-of-first-refusal clause in Kaiser’s 1984 sales agreement with Bowlen. Kaiser wanted a majority stake in the team, but the jury decided against it.

….the Bowlen side contend[ed] Kaiser shouldn’t be able to buy any part of the Broncos — even the 10 percent authorized by the jury — because the Elway deal didn’t trigger the right-of-first-refusal clause, according to court filings. Bowlen contends the clause relates only to a partnership interest in the team and franchise rights, neither of which were offered to Elway.

A U.S. District Court jury in 2004 ruled that Bowlen violated the contract when he offered Elway 10 percent of the team for $15 million.

Advertisement

U.S. District Judge Richard Matsch ruled that Kaiser should be able to buy 10 percent of the team back for the same price. Bowlen also would have the right to buy the stake back after two years under Matsch’s ruling for far less than what a 10 percent stake in the team would be worth.

In any event, both sides appealed. The Court of Appeals today affirmed the part of the jury verdict’s in favor of Bowlen and reversed the part favoring Kaiser. The opinion is highly technical, despite its folksy first paragraph. So much so, that I’ll rely on news reports to for analyisis:

[The court ruled] that an offer to sell John Elway a portion of the team doesn’t violate a provision in the sales contract….. [it] ruled that the way the Elway offer was structured — 10 percent of shares in a company that held ownership of the team, not the team itself – was not covered by the provisions of the contract covering Kaiser’s sale to Bowlen.

“We are not in the business of rewriting or supplementing agreements for parties after a contract is joined,” the panel wrote in rejecting Kaiser’s claims.

As for what John Elway’s been up to lately, Penny Parker of the Rocky Mountain News reports he spent Monday filming a scene for a Hollywood movie at his Cherry Creek restaurant. The movie is Resurrecting the Champ, “starring Samuel L. Jackson as a homeless has-been fighter who makes a comeback.”